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When an industry is changing rapidly, companies must adapt in order to survive. In this whitepaper, a global publisher was seeking a partner that could mitigate risk and build a platform flexible enough for their shifting customer expectations. The solution enabled the company to rewrite their operations game plan and transform their supply chain.

Join our panel of leading economic and transportation analysts as they share their exclusive insight on where rates are headed and the issues that will be driving those rate increases over the next 12 months.

After things appeared to be looking up—in terms of business conditions—for shippers, data released this week by freight transportation forecasting firm FTR Associates indicates that tougher times are indeed back.

But while conditions have lessened in the past month, FTR noted in the most recent edition of its Shippers Condition Index (SCI) that the decline is a modest one, with overall conditions better than they were a year ago at this time.

FTR said the current SCI reading for September, the most recent month for which data is available, is -4.7, which is down 0.9 points from August. July, June, and May hit -3.8, -3.1, and -11.4, respectively, with May being the worst SCI reading of this current economic cycle. A reading above 0 suggests a favorable shipping environment, and FTR describes the SCI as an indicator that sums up all market influences that affect shippers.

Among the factors cited by FTR for the current environment were freight carriers maintaining tight discipline on capacity and pricing, coupled with slow economic growth. And various federal regulations such as the proposed Hours-of-Service changes also have the potential to exacerbate the situation going forward.

In an interview with LM, FTR Senior Consultant Larry Gross said that these findings are not surprising, given the confusion between what is exactly happening in the marketplace when rates are rising sequentially compared to how things were a year ago at the same time.

“Our sense if that with the very modest acceleration that has occurred in the economy the balance between capacity on the truckload side, which consumes the lion’s share of transportation dollars versus other modes and is tightly regulated by carriers, and a modest uptick in demand can be felt by shippers on the rate side,” said Gross.

And capacity control is both a function of the actions of carriers, as well as the inability of carriers that want to grow and locate drivers, he explained.

That is where the dark cloud regarding possible HOS changes comes into play, because it makes the future outlook for capacity more uncertain, explained Gross.

“Not only do we not know what is going to emerge from this political meat grinder [regarding HOS] that is in play, with the White House and FMCSA doing their thing, as well as pressure from the Republican side of Congress not to change anything,” said Gross. “The inevitability of it is whatever emerges when the HOS rule comes out later this month, it is certain to be challenged in court.”

And depending on what the rule is, it will be interesting to see if it includes a reduction in daily driving time from 11 to ten hours, plus the other proposed changes, which are likely to have a dramatic effect on supply chain productivity.

About the Author

Jeff BermanGroup News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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